Midterms for bankers: Winners, losers of key 2018 election battles

November 6, 2018 8:11 PM

The months of political ads, debates and nonstop polling were finally replaced by actual voting on Tuesday.

The outcomes in the 2018 midterm elections are sure to have implications for financial services policy. The Democrats succeeded in retaking the House, in what is likely to be a blow to the Trump administration, but Republicans held onto the Senate, even picking up a few seats.

Following is a spotlight on key races for financial institutions, and their results:

Democrats take control of House

U.S. House Speaker Paul Ryan, a Republican from Wisconsin, shakes hands with House Minority Leader Nancy Pelosi, a Democrat from California, as he holds the speakers gavel after being reelected in the House Chamber at the U.S. Capitol in Washington, D.C., U.S., on Tuesday, Jan. 3, 2017. Ryan was formally re-elected House speaker today at the start of the 115th Congress as he intensifies his efforts to move past his differences with Donald Trump after a divisive campaign. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

Democrats flipped the House from Republican control, regaining the majority after losing it in 2010.

The clearest likely result of the flip for bankers will be that the Financial Services Committee is expected to be led by Rep. Maxine Waters, D-Calif., who is currently the ranking member. That could mean sharper scrutiny of big banks, Trump administration-appointed regulators and regulatory relief plans.

Analysts expect the committee under Waters to focus more on housing and community reinvestment issues. However, in contrast to her criticism of Trump policies outside of financial policies, some say it is possible that she will try to reach across the aisle on key banking issues to try to move legislation.

With a Democratic-run committee, the likelihood of any legislation becoming law goes down. Still, a power shift stokes fear for financial services firms. When asked to quantify their concern about Democrats controlling the House leading up to the election, 41% of bankers participating in a Promontory Interfinancial Network responded with a 5 rating (with 1 indicating the least concern and 5 the most).

GOP holds onto Senate control

Sen. Mike Crapo, R-Idaho, and Sen. Sherrod Brown, D-Ohio

Senator Sherrod Brown, a Democrat from Ohio and ranking member of the Senate Banking Committee, right, makes an opening statement as chairman Senator Mike Crapo, a Republican from Idaho, listens during a hearing with Jerome Powell, chairman of the U.S. Federal Reserve, not pictured, in Washington, D.C., U.S., on Tuesday, July 17, 2018. Powell said the central bank will continue to gradually raise interest rates "for now" to keep inflation near target amid a strong U.S. labor market. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

The Republicans will remain in power in the Senate following vote tallies around the nation Tuesday night.

Most pollsters saw the Senate as likely to stay in Republican control with the Democrats facing long odds to flip GOP-held seats and several Democratic incumbents in tight re-election battles in states won by President Trump in 2016. Several of those key races in red states, including North Dakota and Indiana, went to Republicans.

The Republican victory will result in a change to the makeup of the Senate Banking Committee, now chaired by Republican Mike Crapo of Idaho. It is unclear if Crapo will remain chairman, however. He has been mentioned as a possible chairman for the Senate Finance Committee, which would open up the banking panel to a successor such as Sen. Pat Toomey, R-Pa.

Tester pulls out close victory in Montana

Senator Jon Tester, a Democrat from Montana, speaks to members of the media after departing from a vote on the Senate floor in Washington, D.C., U.S., on Thursday, Aug. 23, 2018. A giant defense, health, social services and education spending bill heads toward Senate passage as lawmakers seek a nominations deal to allow for an August getaway. Photographer: Al Drago/Bloomberg

Al Drago/Bloomberg

A tight race for Democrat Jon Tester's Senate seat in Montana was finally called Wednesday afternoon, with the incumbent pulling out a razor-thin victory over Republican Matt Rosendale. The lead appeared to change hands multiple times Tuesday night heading into Wednesday.

Tester's victory makes him the only Democratic supporter of the recent regulatory relief package sitting on the Banking Committee who won re-election this fall. Two other moderate Democrats on the panel, Heidi Heitkamp of North Dakota and Joe Donnelly of Indiana, both lost Tuesday night. The three senators played a significant role in encouraging Democratic support of the targeted reg relief package, negotiating the bill with Banking Committee Chairman Mike Crapo, R-Idaho.

Like Heitkamp and Donnelly, Tester was also defending his seat in a state won by President Trump in 2016. If he had lost, it would have been a bigger blow to bankers hoping for Democrats to favor reg relief. Compromise in the Senate will be harder with fewer red-state Democrats willing to cross the political aisle.

Sinema wins Arizona Senate race

Krysten Sinema, Democratic U.S. Senate candidate from Arizona, speaks to members of the media during a campaign event in Phoenix, Arizona, U.S., on Thursday, Nov. 1, 2018. In Arizona, which backed Trump in 2016, Republican Martha McSally is going against Sinema for the Senate seat being vacated by Republican Jeff Flake. Photographer: Caitlin O'Hara/Bloomberg

Caitlin O'Hara/Bloomberg

After nearly a week of votes being counted, Democrat Kyrsten Sinema was declared the winner in the Arizona Senate race Monday evening, defeating Republican Martha McSally. Sinema will occupy the Senate seat now held by Republican Jeff Flake, who is retiring.

Sinema, a member of the House Financial Services Committee who enjoyed banking industry support for her backing of the recent reg relief legislative package, went into the vote with a slight edge in the polls.

Sinema not only supported the reg relief bill but also a bill introduced by Rep. Blaine Luetkemeyer, R-Mo., which would have eliminated the asset threshold for banks to be considered “systemically important financial institutions.”

As of Oct. 16, Sinema received $173,204 from commercial banks, according to the Center for Responsive Politics. But McSally also drew backing from the industry. McSally received $25,100 from Wells Fargo’s PACs, individual members, employees, or owners, and immediate families of those individuals — putting her in at No. 4 on the bank’s list in terms of candidates running for Senate.

Dean Heller loses Nevada Senate race

Senator Dean Heller, a Republican from Nevada, waves as he arrives at a rally with U.S. President Donald Trump, not pictured, in Las Vegas, Nevada, U.S., on Thursday, Sept. 20, 2018. Trump continued to hit out at China days after announcing another round of tariffs, signaling the trade war wont end any time soon. Photographer: Bridget Bennett/Bloomberg

Bridget Bennett/Bloomberg

Dean Heller of Nevada, the most vulnerable Republican incumbent on the Senate Banking Committee, lost his Senate seat late Tuesday to Democrat Jacky Rosen.

The race was tight, with Rosen pulling ahead in the final hours of the vote count. Though the Republicans gained seats overall on Tuesday, Heller's loss represented a rare pickup for Democrats in the 2018 midterms.

Cordray loses gubernatorial bid

Richard Cordray, Democratic nominee for governor of Ohio, applauds as former U.S. President Barack Obama, not pictured, speaks during a campaign rally in Cleveland, Ohio, U.S., on Thursday, Sept. 13, 2018. Cordray is a former U.S. President Barack Obama appointee who was director of the Consumer Financial Protection Bureau, the federal watchdog agency now being overhauled by Trump's administration. Photographer: Allison Farrand/Bloomberg

Allison Farrand/Bloomberg

The race to elect Ohio's next governor lacked much direct relevance for banks, but the financial services industry was watching it closely anyway because of the Democrat on the ballot: former Consumer Financial Protection Bureau Director Richard Cordray.

Polls had given Cordray a slight edge in his race against former Sen. Mike DeWine, but Cordray ended up falling short. With most of the results in, DeWine looks ready to win with roughly 50.4% of the vote, according to CNN.

Democrats may now wish Cordray had stayed at the CFPB. He left in November 2017, several months before his term was due to expire in July 2018. As a result, President Trump installed Mick Mulvaney as acting director, who began reversing course on many Cordray priorities.

Heitkamp loses North Dakota Senate seat

Senator Heidi Heitkamp, a Democrat from North Dakota, left, reacts while speaking with an attendee during the West Fargo Police Department's Night to Unite event in West Fargo, North Dakota, U.S., on Tuesday, Aug. 7, 2018. Heitkamp, one of 10 Senate Democrats who face a November re-election in states President Donald Trump won in 2016, is being challenged by Representative Kevin Cramer. Photographer: Dan Koeck/Bloomberg

Dan Koeck/Bloomberg

One of the Senate Banking Committee’s most moderate members, Sen. Heidi Heitkamp, D-N.D., lost her bid for re-election to Republican Congressman Kevin Cramer, as pollsters were predicting the month leading up to election night.

Heitkamp was the banking panel’s most vulnerable incumbent heading into Tuesday's voting. An aggregation of polls by Real Clear Politics showed Cramer up by 11 percentage points at the end of last week, while FiveThirtyEight gave him a 75% chance of winning.

Heitkamp’s re-election challenges were despite her support for the regulatory relief law passed by Congress in May, which she helped negotiate. She received ample donations from the financial services industry.

Donnelly loses Indiana Senate race

Senator Joe Donnelly, a Democrat from Indiana, speaks during a campaign rally with former U.S. President Barack Obama, not pictured, in Gary, Indiana, U.S., on Sunday, Nov. 4, 2018. Obama is stumping for incumbent Donnelly ahead of Tuesday's midterm elections where he faces Republican Mike Braun. Photographer: Luke Sharrett/Bloomberg

Luke Sharrett/Bloomberg

Republican Mike Braun defeated Senate Banking Committee member Joe Donnelly, D-Ind., leaving the committee with one less moderate Democrat who had helped negotiate the reg relief bill. Donnelly faced a tough re-election fight in a state Trump took in 2016, and most pollsters viewed the race as a "toss up."

In pre-election analysis, FiveThirtyEight gave Donnelly a 69% chance of holding on against Braun. Yet several polls suggested the race was neck-and-neck. A recent poll by Fox News showed Donnelly 7 points ahead, but an earlier poll by CBS News showed Braun ahead by 3 points.

Menendez avoids defeat in surprisingly close race

Senator Robert Menendez, a Democrat from New Jersey, arrives to a Senate Banking Committee confirmation hearing with Jerome Powell, chairman of the U.S. Federal Reserve nominee for U.S. President Donald Trump, not pictured, in Washington, D.C., U.S., on Tuesday, Nov. 28, 2017. Powell signaled broad support for how the Fed operates, regulates and guides the economy, offering a full-throated defense of the government institution he's about to lead. Photographer: Aaron P. Bernstein/Bloomberg

Aaron P. Bernstein/Bloomberg

Senate Banking Committee member Bob Menendez, D-N.J., defeated Republican challenger Bob Hugin, in a tighter than usual race in a typically solid “blue” state.

Cook Political Report recently labeled the race as a “Toss Up.”

Menendez, who opposed the Crapo regulatory relief bill, has been under a microscope recently over allegations of corruption, though criminal charges have been dropped. New Jersey’s largest newspaper, The Star-Ledger, came out with a lukewarm endorsement of Menendez, with an editorial titled “Choke it down, and vote for Menendez.” The paper said the race “presents the most depressing choice for New Jersey voters in a generation, with two awful candidates whose most convincing argument is that the other guy is unfit to serve.”

Hugin won some support from big financial institutions. He received $54,400 from JPMorgan Chase’s political action committees, individual members, employees, or owners, and immediate families of those individuals — more than any other Senate candidate for the bank. He was also in the top five candidates for the Senate in terms of campaign contributions from Bank of America and Citigroup as well, according to the Center for Responsive Politics.

Barr wins close race in Kentucky’s 6th House district

Representative Andy Barr, a Republican from Kentucky and chairman of the House Financial Services Monetary Policy and Trade Subcommittee, speaks during a House Financial Services hearing on Capitol Hill in Washington, D.C., U.S., on Thursday, July 27, 2017. Mnuchin ruled out prioritizing U.S. debt payments if Congress fails to raise the borrowing limit and repeated his call for quick action by lawmakers. Photographer: Zach Gibson/Bloomberg

Zach Gibson/Bloomberg

Rep. Andy Barr, R-Ky., a senior member of the House Financial Services Committee who enjoys ample industry support, held off a tough re-election challenge from Democrat Amy McGrath.

According to numerous news networks, Barr won the close race against McGrath who had entered the national political spotlight as the first female to fly into combat in an F-18 jet.

FiveThirtyEight ranked the race as a toss-up. In September, Barr became the first House candidate ever endorsed by FOTB, the banking super Pac.

House Financial Services Committee member loses seat

Representative-elect Conor Lamb, a Republican from Pennsylvania, stands in the speakers ceremonial room before a mock swearing-in with U.S. House Speaker Paul Ryan, a Republican from Wisconsin, not pictured, at the U.S. Capitol in Washington, D.C., U.S., on Thursday, April 12, 2018. Lamb pulled off upset in special election last month for seat that had been in Republican hands for 15 years defeating Republican State Representative Rick Saccone. Photographer: Andrew Harrer/Bloomberg

Andrew Harrer/Bloomberg

Keith Rothfus, R-Pa., a member of the House Financial Service Committee, lost his seat to Democrat Conor Lamb, although Rothfus' re-election had already been in doubt. Lamb is already in the House after he won a special election months ago, but the districts were redrawn so Lamb ran for a full term in a neighboring district.

Senate Banking Committee's top Democrat re-elected.

Senator Sherrod Brown, a Democrat from Ohio, speaks during a campaign rally for Richard Cordray, Democratic nominee for governor of Ohio, in Cleveland, Ohio, U.S., on Thursday, Sept. 13, 2018. Cordray is a former U.S. President Barack Obama appointee who was director of the Consumer Financial Protection Bureau, the federal watchdog agency now being overhauled by Trump's administration. Photographer: Allison Farrand/Bloomberg

Allison Farrand/Bloomberg

Senate Banking Committee ranking member Sherrod Brown, D-Ohio, won his re-election bid against Republican Jim Renacci.

Election watchers widely expected him to win as he consistently led in the polls, although he was running in a state that President Trump won in 2016.

Brown is expected to continue to push back against Trump-appointed regulators as they implement deregulatory measures, and he could begin to attract more attention as a potential presidential challenger in 2020.

Warren wins re-election easily in Massachusetts

Senator Elizabeth Warren, a Democrat from Massachusetts, speaks during an event at the National Press Club in Washington, D.C., U.S., on Tuesday, Aug. 21, 2018. Declaring that big money has created a culture of corruption that colors virtually every important decision in Washington, Warren proposed a sweeping package of restrictions that would create a sea-change in the way the nation's capital operates. Photographer: Joshua Roberts/Bloomberg

Joshua Roberts/Bloomberg

Sen. Elizabeth Warren, D-Mass., the progressive member of the Banking Committee and a consistent critic of large banks, was projected to win her re-election campaign early on Tuesday night, beating Republican Geoff Diehl. Warren’s re-election was never in doubt. She is widely expected to be considering a presidential run in 2020.